Energy: NBers need more specifics to decide about power pact, watchdog says

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Benjamin Shingler
Telegraph-Journal

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FREDERICTON - The Liberal government needs to be more specific about the proposed energy deal with Hydro-Québec, Auditor General Mike Ferguson said Friday.

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STEPHEN MACGILLIVRAY PHOTO

Mike Ferguson

"There's really not enough information to draw a conclusion," Mike Ferguson said in an interview.

"That's why I'm suggesting that the government should start by providing people with more details about what's in the memorandum of understanding, so people can draw their own conclusions about whether this is a good deal."

Spokesman Jordan O'Brien said Friday that Premier Shawn Graham is open to providing New Brunswickers with all the details of the memorandum of understanding that has been signed by New Brunswick and Quebec.

"There's a lot of fine print to work out, it's a complex proposed transaction, and we can find out some more of those details and share those as we move along," O'Brien said.

Ferguson said the Liberals need to be more specific on two issues in particular: firstly, how much residential rates and those of other small volume customers will climb after the initial five-year freeze; and secondly, what is the specific value of the assets and liabilities involved in the sale.

Under the proposed deal, Hydro-Québec would take over most of NB Power's assets for $4.8 billion, wiping out the public utility's debt in one swoop. In return, large industrial rates would be cut by about 30 per cent, immediately falling in line with those of Quebec.

Hydro-Québec would also freeze residential power rates in New Brunswick for five years.

But Ferguson said it's unclear what happens after that point.

"Right now, they seem to be saying that rates will be indexed to the consumer price index, but when you look at the details of the memorandum, there are other things in addition to that, and they need to provide better information about that," he said.

Ferguson said it's also unclear how much it will cost to decommission some of the plants that will go unused by Quebec, and how that will impact the province's books.

He said New Brunswick may be assuming pension liability as part of the agreement as well.

"If they showed you that math, maybe it does spit out at the end that they are ahead, but what's the math and what's the assumption in that math," he said.

"If they just say a number, I can't sit here and say and tell you that's accurate."

The deal has also been criticized for providing major savings to industry instead of residential ratepayers, despite the fact that Graham said when the agreement was announced that 60 per cent of savings would go to residential and small business customers.

O'Brien confirmed that 79 per cent of the savings in the first year of the deal will go to industry.

He said that after five years that savings would be more evenly distributed, and maintained that over the long-term, residential rate payers will get an ever larger slice of the savings.

But Ferguson said that, at this point, it's impossible to determine whether that's the case.

He said the government should provide a range of scenarios for how rates will be affected over the long-term, and a better idea of what the costs will add up to.

"And then, at least you've got some numbers (that people) can consider," he said.

Ferguson said he has no plans to launch an investigation into the proposed deal, explaining that his office had neither the time nor the resources to do so.

He said the government should be able to provide New Brunswickers with all the information.

Opposition Tory leader David Alward said the auditor general's criticisms are further proof that Graham hasn't been transparent about the agreement.

"What is so clear today is that he's misled New Brunswickers," Alward said. "The significant benefits of industry early on (in the agreement) show what this deal is all about."

Daniel Theriault, public intervener on energy matters for the New Brunswick Energy and Utilities Board, has said that, although the agreement states that rates should be based on cost of service, it does not guarantee "just and reasonable" rates.

"The memorandum of understanding doesn't even reference just and reasonable rates for power customers," he said. "I think the board will still have to look at that and determine whether those are just and reasonable rates"

Currently in New Brunswick, any power rate increase of three per cent or less does not require a hearing before the provincial energy and utilities board.

Rate increases in Quebec, however, must always go before a full public hearing.

For example, Hydro-Québec has requested rates to increase 0.2 per cent in April 2010 - an increase the regulator there must first approve.

Meanwhile, Bethany Dykstra, a well-known poverty advocate, who ran unsuccessfully for the Liberals in 2003, has added her voice to those calling for the Liberal government to hold a plebiscite over the energy agreement. Dykstra, a Moncton-area dairy farmer, says New Brunswickers need to be consulted on a decision of this magnitude.

"It is a huge decision to be made, for this year and every year after," she said.